Orange County resident Michael Buday has one eye on the calendar as he makes plans to purchase a used Tesla. He has two months left to take advantage of a federal tax credit that could save him thousands of dollars if he buys an electric vehicle.
The federal government will stop paying a $7,500 incentive for new electric vehicles and a $4,000 credit for used ones on Sept. 30. It’s an abrupt reversal by the Trump administration of Biden-era efforts to address climate change emissions from gasoline cars. The details are laid out in the “Big Beautiful Bill” that passed this month.
The tax credits have been available for cars that plug in but also have a gas tank, such as the Toyota Rav4 Prime and the Chrysler Pacifica Hybrid.
Transportation is the largest contributor to climate change both in California and nationally, and experts say it must get much cleaner to preserve a recognizable climate. About 1 in 4 cars sold in California is fully electric or plug-in hybrid, according to the California Energy Commission.
The elimination of the credits is expected to further stunt EV sales that have already slowed amid plateauing interest in California and steep auto tariffs. Industry analysts and auto dealers predict they’ll see a spike in interest in electric vehicles while people can still get the credits.
Buday, who is looking to buy his second Tesla after purchasing a Model 3 two years ago, said he wants to stay ahead of the curve.
“People tend to not pay attention until it’s getting close to a deadline,” Buday said. “There’s hundreds and hundreds of Teslas even within 60 miles for sale, but I think once people catch on to the fact that these credits are going away, there may be a rush to snap them up.”
The tax credits can be applied to most electric vehicles for sale, including the SUVs and trucks on display at Camino Real Chevrolet in Monterey Park. Dealership president Robb Hernandez said he hasn’t yet seen a significant jump in EV sales yet. Manufacturers are estimating an increase over the coming weeks, he said.
About 20% of the dealership’s total sales come from its electric offerings, Hernandez said, including the popular Chevy Blazer and Equinox. Competition in the electric vehicle space has become increasingly fierce as major auto makers release lines of electric vehicles alongside their gas-powered cars, including Ford and Porsche. Electric-only companies including Rivian and Lucid further crowd the field of competitors.
Hernandez is bracing for a drop-off in sales at his dealership with the expiration of the tax credits but said he’s confident in Chevrolet’s foothold in California.
“We’re kind of anticipating there will be a surge, and then possibly after the expiration of the EV credits, there might be a lull,” Hernandez said. “Hopefully it will all even out.”
Tesla is using the credits’ expiration to try to motivate potential customers, with marketing emails that say, “Order soon to get your $7,500.”
Tesla Chief Executive Elon Musk said in an earnings call this month that the elimination of the credits could hurt his company’s sales and lead to “a few rough quarters.”
The electric vehicle leader has been turning its attention to robotics and autonomous driving technology as vehicle sales falter. Tesla reported a 16% year-over-year decline in automotive sales last quarter.
The news that the credits are expiring may also be drowned out by the overall price volatility consumers are dealing with.
“Most people in this economy are reading the news and struggling to make purchase decisions based on all these moving targets,” said Dominick Miserandino, a consumer behavior expert and chief executive of Retail Tech Media Nexus.
“The average person is just trying to make sense of it all,” he said.
